29 February 2012

Sekunjalo Investments vs. Sunday Times

2012 (Rulings), All Rulings, Ombud Rulings

This ruling is based on the written submissions of Mr Kaveer Bharath, spokesperson of Sekunjalo Investments, and the Sunday Times newspaper.

Complaint

Sekunjalo Investments (SI) complains about a page 2 story in the main section of the Sunday Times, published on 4 December 2011 and headlined Something fishy in R1 bn patrol tender.

The company complains that it was not afforded adequate time to respond properly.

It adds that the:

story omits to state that companies owned by SI all work autonomously (which has a direct bearing on the possibility of a potential conflict of interest);
story relies on one, uninformed and biased source only, and omits to state that this source himself was under investigation;
journalist compromised the company’s written response;
story misleadingly states that the tender was awarded solely by the DAFF;
phrase “politically connected” (in the intro) is misleading;
story omits to attribute the phrase “the wolf guarding the hen house” to the source’s blog;
statement that International Relations Minister Maite Nkoana-Mashabane failed to declare payments to parliament is incorrect and that it did not have adequate time to respond to this specific allegation;
use of the phrase “industry stakeholders” is misleading; and
statement that Premier Fishing clashed with trustees over unpaid dividends to a workers’ trust is incorrect.

Analysis

The story, written by Bobby Jordan, says that a “politically connected consortium” which owns one of South Africa’s biggest fishing companies (Premier Fishing) and led by “top empowerment firm” SI, has secured a nearly R1-billion tender to police the country’s fishing industry at sea. The journalist writes: “This has triggered concerns that the company is set to become both player and referee in the policing of the country’s R2-billion-a-year fishing industry.” The story then quotes sources who have expressed concern about a possible conflict of interest and “shock” that SI was to be entrusted with one of South Africa’s key maritime assets – “a fleet of seven government vessels responsible for scientific surveys, anti-poaching patrols, and inspections of fishing trawlers for illegal activities”. However, spokesman for the Department of Agriculture, Forestry and Fisheries (DAFF) Hein Wyngaard reportedly said that the Department and SI would put “measures in place” to ensure there was no such conflict during fishing patrols.

I shall now look at the merits of the complaint:

Inadequate time for proper response

SI complains that the journalist contacted it on Friday 2 December, which did not provide the company adequate time to respond, or an opportunity to provide documents to corroborate its statements.

Sunday Times disputes this, as SI “managed to answer our questions and enter into further correspondence around them”. The newspaper argues that, while obtaining supporting documents would have been beneficial, these were not essential to the story.

The newspaper indeed did not give SI abundant time to respond, as the journalist sent his questions on Friday, 2 December at 13:31 – giving the company just more than a day to respond.

The question is if it was enough time.

Note that Jordan asked SI approximately 15 questions – some of which clearly needed some consideration.

These are the facts:

Even though Bharath was on holiday, he did manage to formulate a 1175-word response to the questions;
Bharath responded to all the questions, one by one (except for one set of questions);
Bharath never complained in his response that he had too little time (except for that set of questions), nor did he state that he needed to furnish the newspaper with more documentation; and
Bharath sent his response in time, as the head of SI’s Corporate Affairs forwarded his reply to Jordan at 10:01 the following (Saturday) morning.

I shall come back to the set of unanswered questions right at the end of this analysis.

Normally, with complaints such as these I take into account both the quantity and the quality of the questions. In this instance, I would not have blamed Bharath if he told the journalist that he did not have enough time to respond – partly because he was on holiday, partly because of the number of questions, and partly because some of the questions needed consideration.

However, the fact remains that Bharath did respond – adequately, and in time.

If his response was inadequate, it would have been a different kettle of fish.

Omitting to state that companies owned by SI all work autonomously; conflict of interest

The story quotes Mr Shaheen Moolla, the government’s former head of fisheries management, as saying that the tender constitutes a conflict of interest: “The vessels include both research and patrol vessels and Sekunjalo is the holding company of Premier Fishing! Here we have a fishing company in charge of ‘managing’ patrol vessels for goodness’ sake…” The story repeats this opinion several times.

SI complains that Jordan:

omits its comment to Jordan where it states that it is an investment holdings company that owns many other companies – all of which work autonomously, or on a decentralized basis. It argues that this “extremely important point” directly addresses the matter of a potential conflict of interest relating to the deal referred to in the article, concluding that the story therefore misleads the public about a perceived conflict of interest.
apparently made no attempt to refer to the technical specifications document relating to the deal in question – a document which it says is available on the internet and “directly addresses” the conflict of interest issue. (SI adds that it referred the journalist to the DAFF for more information about how the conflict of interest issue was dealt with.)

Sunday Times says the story does say the SI was the holding company, albeit in different words. It refers to: “Sekunjalo owns a majority stake in Premier Fishing…”

Regarding a possible conflict of interest, the newspaper adds that:

in addition to the people mentioned in the story, it spoke to three of the most senior members of the fishing industry (see the next sub-heading), “who all voiced concern over a possible conflict of interest”;
Wyngaard acknowledged that there was a perceived conflict of interest;
SI mentions “technical specifications” in its complaint, but the company does not say what these are or why they should have been included in the story; and
its reporter did in fact see the tender documents. However, the newspaper argues: “…the tender documents do not cause the widespread concern over the perceived conflict of interest to evaporate.”

Firstly, then, the matter of the omission of the autonomous, decentralized basis on which the companies were said to operate: It would be fair to say that the gist of the story is about a perceived conflict of interest (a fishing company that is also managing patrolling vessels which are supposed to carry out unscheduled checks on fishing trawlers) and that this aspect is therefore at the heart of the complaint.

This is also evidenced by most of Jordan’s questions to SI.

One of the main points that SI makes in response to Jordan’s questions, is that “all businesses within our group…work autonomously”. The company reiterated that SI, as part of the consortium, “secured the contract as an autonomous business within the group”. Immediately after this statement, SI says that it (therefore) believes that it has adequately dealt with the issue of a conflict of interest.

It is true that the story states that SI owns a majority stake in Premier Fishing – but surely, that does not adequately cover the notion, as communicated by Bharath to Jordan, that its companies were operating on a decentralized and autonomous basis.

It does not matter if Jordan agrees with this argument or not. The fact of the matter is that this was presented to him as an official response to the central question of a possible conflict of interest – a response that the story does not reflect.

On the other hand, the story does mention a spokesperson of the Department of Agriculture, Forestry and Fisheries, Mr Hein Wyngaard, who reportedly said that the department has considered the issue of the “perceived conflict of interest” and that “the risk will be mitigated with appropriate control measures”. It also quotes Bharath as saying that the question relating to a potential conflict of interest was a fair one and that the SI “went to great lengths” to address this issue.

This does bring some balance to the story.

The real question, therefore, is if this “balance” is enough to warrant the omission of the issue of autonomy.

It is not, and this is why: The story namely states twice that the matter has been addressed – but it does not say how (read: autonomous, decentralized). I do not think that this is fair to SI.

Now, regarding the tender document that allegedly “directly addresses” the conflict of interest issue.

I told Bharath that I have studied the document in question, but stated that I could find no evidence that it “speaks directly” to the conflict of interest issue. I then asked him: “Have I missed something? Please point me in the right direction.”

He did not respond to this request.

One, uninformed, biased source

SI complains that the journalist relied mainly on one source, namely Moolla – but the story presents his opinion as such that it creates the impression that there are many who share his concerns.

SI also argues that the story fails to mention that:

the story was effectively a reprint of Moolla’s blog posted the previous weekend;
Moolla’s blog was “largely dedicated against DAFF”;
Moolla has not worked for the Department for many years and therefore had no direct knowledge of the DAFF tender – which made him a secondary source;
Moolla had prior commercial links to Premier Fishing, which was “crucial” within the context of his statements against the company; and
the same journalist had also reported (on 31 July 2011) that Moola was being investigated by the Serious Economic Offenses Unit for transactions “that prove he has commercial interests” – but instead, the story quoted him as “a former state employee”. This, SI says, was a deliberate attempt to mislead the public.

Sunday Times denies that it relied on one source only. It says that:

its two sources (Moolla and Artisala Fishers Association spokesperson Andy Johnson) are both credible players in the fishing industry, “and there is no reason why we should not reflect their concerns – especially when they reflected the concerns of other senior players who spoke to our reporter”; and
in addition to the people mentioned in the story, it spoke to three of the most senior members of the fishing industry.

The newspaper admits that its reporter used information from Moolla’s website. However, this site “was only one of the sources of information he used in his investigation”. And: “There is no reason why he should not have included information from Mr Moolla’s website.”

The paper denies that there is any basis for the complaint that Jordan:

attempted to mislead the public by stating that Moolla was a former state employee – it argues that the latter was done to show that he has some insight as he was formerly in charge of the patrol fleet; and
did not mention that Moolla was being investigated – it says that this was well covered in a previous story and that it had no bearing on the matter at hand.

These are my considerations:

To me, it is clear that Moolla is not used as a source at all – every single sentence that is devoted to him is comment, rather than information;
The announcement of the tender by Fisheries Minister Tina Joemat-Petterson is the real source of the story;
The story reflects both Wyngaard’s and Bharath’s comments on the potential for a conflict of interest; also, the story mentions that SI has confirmed that the tender committee had raised queries regarding this matter – it is therefore most probable that Moolla’s opinion indeed reflected the concerns of many people (rightly or wrongly);
I don’t think it was necessary for the journalist to state in his story that a part of his information was derived from Moolla’s blog;
The allegation that Moolla’s blog was “largely dedicated against DAFF” is not central to the story; and
On Moolla not having worked for the Department for many years (and therefore having no direct knowledge of the DAFF tender – which made him a secondary source): Again, the story does not even use him as a secondary source (of information); it merely reported his opinion.

The newspaper’s arguments regarding Moolla’s prior commercial links to Premier Fishing and him being investigated are credible.

Written response compromised

SI complains that Jordan:

“cherry-picked” its written reply (of 3 December), compromising its direct response to questions raised in the story; and
copied and pasted certain statements, and refers me to the link http://feikemanagement.blogspot.com/.

I enquired what “statements” SI had referred to, upon which it told me it was about the “wolf guarding the henhouse”.

Firstly, the matter of cherry-picking: After having studied both Jordan’s questions and Bharath’s responses, as well as the story, I am satisfied that there is no real material issue that Jordan neglected to mention (apart from the one that I have already dealt with, and another that is still to come).

I’ll come back to the “wolf guarding the hen house” statement.

Tender awarded solely by DAFF

SI complains that the story misleadingly states that the tender was awarded solely by the DAFF. The company says that it has confirmed to Jordan in writing that the awarding of the tender was subject to a process by an interdepartmental committee, including National Treasury – information that the story neglects to mention.

Sunday Times says that the story neither says nor implies that the tender was awarded solely by the DAFF – the bureaucratic detail that led to the tender being awarded were of “scant interest” to its readers. It argues that there was no onus on its reporter to mention Treasury’s involvement or to go into any detail about the awarding of the tender – the story aired the fact that the tender had been awarded and it reflected concerns about its awarding.

I note that the story implicates the DAFF via:

its Minister (who announced the awarding of the tender);
Moolla (due to his former connections with the department);
its spokesperson (Wyngaard); and
the reported request for information regarding the deal from Amit Amandly, the shipping company that was in charge of managing the country’s anti-poaching patrol fleet.

I also note that the story does not mention any body/institution other than the DAFF that was involved in the awarding of the tender.

This means that, even though the story does not explicitly say that the tender was awarded solely by the DAFF, it can be interpreted in such a way.

Also: The newspaper’s argument about “bureaucratic detail” does not hold water. Why else then did Jordan ask SI the following question: “There are unsubstantiated reports that Sekunjalo enjoys a close relationship with DAFF, and that the company bank-rolled the Minister’s recent birthday party? Is this correct?”

Moreover, the story mentions that SI’s chairperson “frequently travels abroad on state and business trips with government ministers” and that he received R100 000 for providing security at the private home of a minister.

The reader can indeed be forgiven for thinking that some sort of untoward relationship between the DAFF and SI may have been underlying the awarding of the tender. For this reason, Jordan should have reported that an interdepartmental committee, including National Treasury, was involved in the selection process.

‘Politically connected’

The story states that the consortium, headed by SI, was “politically connected”.

SI complains that this reference is misleading, sensationalist and unfounded.

Sunday Times says the story reflects:

that SI chairman Iqbal Survé frequently travelled abroad on state and business trips with government ministers and President Jacob Zuma; and
the undisputed fact that Premier Fishing, of which Survé was a director, was exposed for providing around the clock security at the International Relation Minister’s private home in Polokwane.

I note that SI did not complain about the truthfulness of the matters raised by the newspaper (above). Given this, it was reasonable to suspect that there were political connections of some sort, and that Jordan was therefore justified to have used the phrase in dispute.

Phrase ‘the wolf guarding the hen house’ not attributed

The story says: “A senior industry source said giving a fishing company influence over the country’s patrol fleet was a case of ‘the wolf guarding the hen house’.”

SI asks why this source remains anonymous, as it is a direct quote from Moolla’s blog (http://feikemanagement.blogspot.com/). “Why isn’t it cited as such?”

Sunday Times admits that it was preferable to attribute the quote in dispute, but submit that it was not essential to do so “as it was a statement that summed up the concerns of sources quoted on the record in the story”. It adds that the comment was made by one of the three senior unnamed fishing executives to whom Jordan spoke.

The newspaper’s argument is convincing. Although it is normally preferable to identify a source, the Press Code does make provision for the use of unnamed sources.

Nkoana-Mashabane

The part of the story in dispute reads that Premier Fishing “…was last week exposed for paying R100 000 to provide around the clock security at the private home of International Relations Minister Maite Nkoana-Mashabane in Polokwane. The minister failed to declare the payments to parliament.”

SI complains that:

Jordan did not give the company an opportunity to adequately respond to this statement; and
the statement that the minister did not declare this payment is false (adding that it is not sure if the newspaper tried to interview the minister).

The newspaper argues that SI has no standing to complain about the accurateness of the statements in question.

I agree with the Sunday Times – the (first) statement in dispute is about Premier Fishing, and not SI. A complaint to this effect should therefore have come from the former. Likewise, a complaint about the second statement should have come from Nkoana-Mashabane.

Two individuals not representative of industry

SI says that the story only quotes two individuals, Moolla and Johnson, who expressed “shock” at the situation. The company complains that they are “hardly representative of the industry”. It adds that neither of these sources apparently made any reasonable attempt to acquaint themselves with the contract in question – this, while all tender bid documents were available on the government website.

Sunday Times argues that, although the story does not mention the three senior executives that it said Jordan spoke with, their views strongly supported the views aired by people named in the story. “Although the story did not claim to be an exhaustive survey of industry players, it did in fact reflect views that are widely held in the industry.”

I find it strange that the story does not mention these three senior executives, as it would have strengthened Jordan’s story.

Still, the newspaper’s argument about the story not claiming to be an exhaustive survey, and that it reflects widely held views is convincing.

Premier Fishing clashing with trustees

The story says that, according to documents in the possession of the Sunday Times, Premier Fishing “…clashed with trustees over unpaid dividends to a workers trust”.

SI complains that this statement is incorrect. The company adds that Jordan failed to get comment from the relevant board of trustees or, if he did, he neglected to report this.

The newspaper admits that it did not ask SI to respond to anything on behalf of the workers’ trust – it asked the company only regarding matters concerning Premier Fishing’s obligations to the trust. It says that Jordan based this section of the story on correspondence from the trust to the board of trustees of Premier Fishing (“not to the board of the trust, as Sekunjalo mistakenly says in its complaint”), as well as on discussions with the author of the correspondence and with the workers’ union. “In any event, we dispute there is a basis for a complaint in this regard as we did not go into the merits of the issues around the clash.”

I note that Jordan specifically asked Bharath if it was true that workers did not receive dividends for several years despite the company reporting profits. To this, the latter said: “I cannot speak on behalf of the trustees on these issues within the timeframe you’ve given us.”

And yet, Jordan does not ascribe the phrase in dispute to a source, but he states it as a fact – without mentioning that Bharath said that he did not have enough time to respond to this question.

Be that as it may, the newspaper is correct in that this issue is not material to the story.

Finding

Inadequate time for proper response